About this Author

College chemistry, 1983

The 2002 Model

After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases.
To contact Derek email him directly: derekb.lowe@gmail.com
Twitter: Dereklowe

August 16, 2010

Is Genzyme a Buyable Company At All?

Posted by Derek

Word is now that Genzyme's manufacturing problems won't be solved for years, which has people wondering if Sanofi-Aventis (or anyone) will feel safe making a bid for them. That's the single biggest issue hanging over the company, and that's an awful lot of uncertainly to be taking on.

If so, it looks more and more like whoever set up this trade will end up doing just fine on it. . .

Actually, I think it's the perfect time for Sanofi to buy the company:

1) The manufacturing problems are depressing the price of the stock. Even with the premium paid, you're getting a pretty good deal. Combine that with the current investors who are thinking "Let's see, take $80/share now or let the current management try and get the share price back up." It's a quick way out of the investment.

2) The FDA has already laid the smack-down on Genzyme. All Sanofi has to do is make sure it CAN meet the demands of the FDA consent decree. Basically you have a problem, but the solution is laid out in front of you, you just have to figure out whether or not you can do it. The FDA basically did a good chunk of the due diligence already!

3) If there is one thing that big pharma is good at it's paperwork. In the case of Genzyme, that's exactly what they need to fix their manufacturing problems; a clear, methodical QA system with plenty of checks and balances. Plus, Sanofi has the resources ($$$) to throw at fixing these problems once and for all. Genzyme says it will take years to fix the problem, but maybe Sanofi is thinking "We can fix this in two!".

I think Sanofi looks at Genzyme right now like an old rusty 68 1/2 Mustang. The current owners are motivated to sell and nobody else wants to touch it.